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Preventing Theft a Loss Cause

Preventing theft a loss cause

Devices, dollars and supplies disappearances lead to dismal fiscal results

by Rick Dana Barlow


Imagine surfing around your favorite consumer e-commerce sites and online exchanges after work and spotting some curious items up for sale.

Someone wants to sell some familiar medical equipment and supplies to the highest bidder. The products look familiar because you can spot your hospital’s logo on a cover that wasn’t effectively obscured in the photograph.

What do you do now? Television cop/detective show logic might inspire you to submit an outrageously high bid under an assumed name to ferret out the culprit, potentially unearth a black market ring involving selected members of your surgical services, supply chain and nursing team, and earn fame and fortune as the big hero in your facility.

But that’s reel life.

While similar examples have occurred in real life, hospitals also can suffer from myriad other incidents that span the spectrum from innocent mistake to downright malfeasance and skullduggery. Incidents can – and do – range from a CEO acquiescing to a political shakedown to a CFO embezzling funds through suspect accounting measures to a supply chain manager filing dummy invoices to a nurse pulling incremental inventory from the stock room to help a neighborhood free clinic to a patient’s family taking home supplies because they feel they’ve paid for them courtesy of a hospital stay.

Ethical purists would decry these examples as legitimate crimes; others might classify the latter, as well as nurses hoarding supplies in secret drawer stashes and above ceiling tiles as more of a gray area.

Either way, products and money disappear, leading to bottom- and top-line financial losses that may not carry dire operational consequences immediately, but contribute to the inefficiencies and wasteful spending claims that stain healthcare organizations.

Sweating the small stuff

C-suite and departmental financial thievery and data/informational security breaches may garner big headlines, but it’s the small stuff that can bloat miscellaneous expense accounts written off as bad debt.

Patients and their visiting family members taking patient chargeable/consumable supplies from hospital rooms and nursing floor/hallway exchange carts seem to be the most prevalent kind of hospital theft, according to a survey conducted by VHA Inc. nearly two years ago. Stolen devices and supplies in the stockrooms, surgical suites, warehouses and incidents where a buyer, clinical business manager or supply chain manager dummies up purchase orders and invoices to shop stolen products on Internet e-commerce sites wasn’t addressed.

Dee Ann Cross

"We’re very interested in helping our members decreasing their losses," said Dee Ann Cross, senior clinical manager, Novation, VHA’s supply chain management company, about the motivations behind the survey. "When you talk about non-salary expense reduction, this runs the gamut. This has been something that has gone on for some time, and not necessarily done maliciously. What we were trying to do is help our members become more viable by better managing the bottom line in reducing lost charges. We conducted this survey in hopes that it would spur members to talk about these issues and potentially conduct their own surveys."

In fact, survey results and verbatim comments from the hospital respondents showed issues with the loss of scrub suits and linen, and not so much regarding the storeroom and other areas, according to Cross.

But problems do occur throughout the facility, lamented Michael Bohon, founding principal, HealthCare Solutions Bureau LLC, Show Low, AZ, and a former hospital supply chain executive.

"I am aware of a number of situations where people set up faux companies to purchase from and were eventually caught," Bohon told Healthcare Purchasing News. "Awareness, segregation of duties, [such as between] purchasing, receiving and accounting, and an auditing process are keys to prevention."

Michael Bohon

Stealing patient chargeable/consumable items just requires vigilance, Bohon indicated. Theft from storerooms and surgical suites is tough in smaller hospitals or satellite operations, he continued, and that leads to the forged POs and invoices and dubious online sales.


"With the available data systems a review to identify outliers is easier than it used to be and can highlight possible areas or cases of deception," he added. "The most prevalent loss remains small in value, but high in frequency – theft from inventories in general stores or in departments/units."

While VHA and Novation aren’t planning to conduct any follow-up surveys at this time, Cross encouraged hospitals and integrated delivery networks to do their own internal research or reach out to their group purchasing organization. Further, she recommended that providers tap a third-party organization to do the survey, "because they can focus on loss prevention more objectively with the right questions."

Track and trace

To thwart any misbehavior involving patient consumables to high-tech equipment theft by staff members, senior executives, patients and their families, healthcare organizations simply must get tough, set ground rules, enforce them and use available technology to help.

"The answer is simple in concept and often difficult in practice," Bohon acknowledged. "Healthcare organizations must have definitive policies and procedures for dealing with theft or fraud. Secondly, they must communicate them to the nth degree to ensure all are aware of the rules and the consequences. Finally, when a case is uncovered and verified, the hospital must enforce the rules as they are written. Most issues in this problem area happen as a result of people expecting that there will be no consequences for a violation. Therefore, there is no reason to hesitate. Strict enforcement will drop the incident rate dramatically."

Dan Kloenne

Dan Kloenne, security sales manager, Ready Electric Co. Inc., Louisville, KY, concurred. Ready Electric implements technology for security installations.


"The main process is to have policies in place to protect any theft and what the consequences are if theft occurs," Kloenne said. "Employees, patients, family members and vendors must be aware of the policies and the consequences. Products, equipment and valuable items must be secured and inventoried regularly. Not everyone should have access to all or some valuable items.

"A plan on managing the movement of people on where they can’t go will help to decrease theft," he continued. "Secured areas for inventory and valuable items should be monitored with access control, [closed circuit television] and alarms."

Kloenne cited the ICU/CCU as a prime example. "These areas need access control at the entrances," he said. "This allows only authorized staff and doctors to enter. An intercom at the doors is standard to let family members enter and to keep the general public out.

"Within ICU/CCU you have high-priced equipment meds and other valuable items, all of which is usually kept in a supply room," he continued. "This room can be equipped with another card reader and better yet a fingerprint reader. This gives you a higher level of security. Someone may have access to ICU/CCU but not the supply room. With limited access to this room, if things are missing it can be easily determined who possibly was involved. Of course, adding cameras can even increase the level of security and furnish you with more evidence of who is involved."

Kloenne further noted that security technology can be installed on various doors outside of the ICU/CCU to regulate access, easily manage the movement of people and have a historical report of access and attempted access.

Theft prevention tips

Following are 12 strategies and tactics for preventing, if not managing, the potential for theft as well as the response of identified incidents, recommended by experts who spoke with Healthcare Purchasing News.

• Track and trend losses to see if they recur during specific shifts. Cross-check to see which staff members repeatedly work during shifts where losses occur.

• Provide in-service sessions to staff and disclose the dollar amounts of loss and the impact on the facility and eventually the [economic] impact on individuals, such as job losses, the ability to purchase new capital equipment for the facility, etc.

• Place posters in areas demonstrating and equating loss to number of jobs, etc.

• Reward specific departments (e.t., nursing, lab, ER) for the lowest number of losses for a month/quarter/year.

• Include personal items in the room rate.

• Charge a per-diem for supplies for each patient day.

• Issue two pairs of scrubs to staff required to wear scrubs. If they come back for a new pair due to loss or whatever, they pay for all others issued to them after the first two.

– Dee Ann Cross, senior clinical manager, Novation, Irving, TX

• Check on inventory discrepancies to determine if there is a pattern and if there is an explanation for its occurrence.

• Do a periodic review of new established suppliers in your vendor file. You should be aware of new ones anyway and this will give you the opportunity to discover any that are questionable.

• Don’t just set tight policies on P-card purchases. Ensure that someone is conducting a periodic review/audit of the purchases to look for any that may be questionable or inappropriate.

• Establish a team approach with your counterpart in finance in advance of a problem occurring so when they do occur you will both know exactly what steps you will take.

• Monitor and control the activity of suppliers’ representatives while they are on your property. They are not all above reproach and can have self interests that may prompt them to carry out questionable or illegal behavior.

– Michael Bohon, founding principal, HealthCare Solutions Bureau LLC, Show Low, AZ

Cross insisted that global supply data standards should be an effective strategy for loss prevention in that it’s easily tied into IT integration with internal systems, including revenue cycle. She specifically cited GS1 Healthcare US standards that identify products and trading partners. "The ability to track an item could be a deterrent to losses occurring through theft," she added.


Automated dispensing machines and portable bar-code scanners can be helpful, as well as just-in-time distribution and bundled supply kits may remove some of the temptation to take something, Cross noted.

She doubted whether the doorway scanners used in popular grocery stores and retailers to monitor product theft would become widespread hospital solutions because they may run counter to a facility’s customer-focused emphasis. Same goes for those concealed ceiling-mounted cameras, which may encroach on privacy issues within a healthcare facility that a retailer wouldn’t have to worry about. But she acknowledged they could work in central storeroom areas.

"Whether you use it in a central storeroom area for the high-tech products vs. patient chargeables is a case-by-case situation," Cross said. "Setting up per-diem charges or flat fees for products on the hospital bill might solve the problem. More facilities are moving away from patient charges." VHA’s study highlighted those products sporting patient chargeable stickers.

But she recognized that hotels may have the closest solution to what hospitals can offer. "If the robe is gone from the hotel room, you’re going to be charged for it," she said. Hospitals that bar code or affix radiofrequency identification chips to supplies can operate in a similar way. "You want to be very customer-oriented in a healthcare facility," she added. "It’s a fine line you have to walk."

When a supply chain manager uncovers problems, to prevent product theft long-term he or she simply has to follow the products and/or money and then follow the organization’s internal procedures to the letter, according to Bohon.

"After you have researched the situation thoroughly to ensure that there is little doubt of an impropriety, don’t try to handle it yourself if the matter is at a serious level," he said. "Bring in the appropriate people from security and [human resources] and stand to one side and let them do their jobs."

Cross encouraged supply chain managers to put these incidents into real-life context as a preventive measure.

"If you equate the [product and money] losses to the number of jobs you may have to lose you bring a lot home," she said. "Encouraging staffers to watch and to remember to charge for products is something we all have to learn to do."


Follow the money

Type the words "hospital embezzlement" in your online search engine and you’ll see scores of reported incidents pop up within the last two years alone.

Unless product theft involves expensive high-tech devices or equipment incidents go largely unreported.

But five-, six- and seven-figure accounting schemes, regardless of circumstances or motivation, raise eyebrows.

Some say stealing products – at least the smaller, less-expensive consumables – is easier to carry out when compared to the high-priced stuff or the cash.

Not necessarily, according to Michael Bohon, founding principal, HealthCare Solutions Bureau LLC, Show Low, AZ, and a former hospital supply chain executive.

[Embezzlement by a senior executive] is easier because it is not expected," he told Healthcare Purchasing News. "Conventional wisdom assumes that because of their level and position of trust they would not consider being involved in such activity nor have the need to. But there are exceptions. There was a case of a CFO of a major hospital that – against policy – decided to use his corporate credit card for the purpose of enlarging his wardrobe. When confronted about it, he said it was a simple mistake. It was pointed out to him that he had made the same simple mistake six times over a two-month period."

Background checks by human resources may help but they don’t necessarily predict behavior motivated by financial hardships or desperation stemming from an affair as was the case of the convicted ex-CFO of Danbury Hospital, Hartford, CT, earlier this year.

So what preventive measures can be taken, if any, to head off potential wrongdoing by someone wallowing privately in fiscal straits? Because we don’t live in a world like the one in the 2002 Steven Spielberg neo-noir science fiction film "Minority Report," which was loosely based on the popular Philip K. Dick short story "The Minority Report," not much.

But that doesn’t mean you throw in the towel and simply react.

"Be as aware as you can be about your employees, especially those in financially responsible positions," Bohon advised. "Instruct all employees to report any type of suspicious behavior by explaining that you want to head any problems off as soon as possible so that the suspect employee does not find themselves in bigger trouble."

Just don’t turn your head the other way or the consequences may be even more stringent.

"Be proactive! Do not just hope the problem will correct itself," Bohon added. "When they don’t and it is discovered you have been aware of them, you may find yourself on the hot seat."


Commonly pilfered items

Here’s a list of the most commonly pilfered, typically stickered patient chargeable items reported by hospital supply chain managers in VHA’s survey.




Small instruments

Toilet paper






Incontinence products

Hospital-furnished baby clothing

Any and all unsecured supplies

Baby towels

Office supplies (e.g., paper, toner)

Baby gowns and outfits (e.g., onesies)

Baby formula




Food and drink items



Personal care items (e.g., tooth-brushes, toothpastes, combs, deodorant, mouthwash, shampoo)

Baby-nursing gowns


Bath blankets

Energy saver light bulbs

Baby blankets





Reusable wash basins


Bed exit systems


Thermal blankets




Television remote control devices

Digital thermometers

Personal protective devices
(e.g., masks)

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